Realty Income Earnings: Invests Over $300 Million in Europe at Average 8.2% Cap Rate

Realty Income reported first-quarter results that were slightly better than we anticipated, leading us to reaffirm our $76 fair value estimate for the no-moat company. Economic occupancy declined 10 basis points sequentially to 98.8%, though that is slightly better than our 98.6% estimate. Re-leasing spreads were 4.3%, better than our estimate of new rent being 2.5% higher compared with prior lease terms. However, same-store net operating income was only up 0.8%, below our estimate of 2.3% growth. Still, Realty Income reported adjusted funds from operations of $1.03 per share, a penny better than our $1.02 estimate and $0.05 better than the $0.98 the company reported in the first quarter of 2023.